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Mrunal (Economy Q) GDP DEFLATOR, REAL AND NOMINAL GDP Print
Mrunal (Economy Q) GDP DEFLATOR, REAL AND NOMINAL GDP Print
Mrunal (Economy Q) GDP DEFLATOR, REAL AND NOMINAL GDP Print
GDP Deflator
Image: Formula In our onion case Nominal GDP in 2010= 70 Rs/kg x 100 kg=Rs. 7000 Real GDP as we calculated=3000. So, GDP deflator= [7000/3000]x100= 233 What does it mean? Here, GDP deflator is >greater than 100. That means there is inflation. (very very
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heavy inflation) IF it was near to 100, thatd mean, there is no difference in real and nominal GDP hence there is no inflation in India. Weve WPI and CPI to measure inflation, but they dont include each and every product and service available in India, while with GDP deflator, we can get an inflationpicture of them too. btw, DONOT CONFUSE ABSOLUTE GDP NUMBER WITH PERCENTAGE RISE. Newspaper: Montek Singh said weve got 8% GDP in 2010 That doesnt mean Indias GDP is 8%. It only means whatever was our GDP in 2009, weve increased it by 8%. IF India produced goods and services worth 100 billion $ in 2009, then in 2010 weve produced goods n services worth 108 billion $. Thats why GDP rose by 8%. Now back in our onion example, 2009s real GDP=3000 2010s real GDP=3000 So real-GDP has rose by 0% in two years.
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